Economic reform - the introduction of elements of the market into a planned economy - has been the central political problem for socialist states for at least three decades. This thesis seeks to elucidate the nature of the problem through a reconsideration of the general theoretical issues, and through a comparative analysis of the practice of economic reform in two countries - Czechoslovakia and Hungary. In Part One, the arguments in favour of the use of the market in socialism are recapitulated, and the implications of various socialist economic models for political freedom, democracy, and the realisation of some concept of the 'social interest 1 are discussed. The case studies presented in Part Two address the practical political problem of introducing market-type reform into communist systems. In Czechoslovakia, the issue of economic reform contributed to a profound political crisis culminating in 1968. But it is argued, economic reform was not the only, or even the most important source of the crisis. In the different political conditions in Hungary, economic reform was embraced by the regime as a means of securing political stability and popular legitimacy. Political crisis was avoided, but at the costof compromise in the economic reform. The conclusion is that while full-scale democratisation of the political system may not be an inevitable concomitant of economic reform, profound changes in the style and instruments of communist rule are required.